U.S. Service-Sector Activity Accelerated in April -- 2nd Update

By Sarah Chaney and Jeffrey Sparshott Features Dow Jones Newswires

U.S. service-sector activity accelerated in April, a sign of momentum for a broad swath of the economy heading into the second quarter of the year.

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The Institute for Supply Management on Wednesday said its index of nonmanufacturing activity -- which tracks industries including health care, finance, agriculture and construction -- rose to 57.5 in April from 55.2 in March. A number above 50 indicates expansion.

Economic activity in the nonmanufacturing sector grew for the 88th consecutive month.

One dark spot was the employment index, which declined to 51.4 from 51.6. The Labor Department will release payrolls data for April on Friday.

"Despite this report, we continue to expect a bounce-back in services employment growth in the April employment report, a source of data we believe gives a superior read on service-sector activity," Rob Martin of Barclays said in a note to clients.

The prices index in Wednesday's ISM report, which tracks companies' costs for materials and services, increased to 57.6 last month, driven by rising transportation, produce and fuel costs.

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The broader economy has recently sent mixed messages. The labor market slowed in March and gross domestic product, a measure of economic output, stumbled in the first quarter on tepid consumer spending. The price index for personal-consumption expenditures, the Fed's preferred inflation gauge, declined 0.2% in March.

A separate ISM gauge that tracks activity in the much-smaller manufacturing sector pulled back in April, falling to 54.8 from 57.2 the month prior.

Write to Sarah Chaney at sarah.chaney@wsj.com and Jeffrey Sparshott at jeffrey.sparshott@wsj.com

(END) Dow Jones Newswires

May 03, 2017 12:11 ET (16:11 GMT)